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AXIS Capital paying close attention to US tax reform proposals, CFO says

AXIS Capital Holdings Ltd. is "closely" monitoring all proposals related to U.S. tax reform, CFO Joseph Henry said during a fourth-quarter 2016 earnings call.

In response to a question on whether any tax reform plan would lead to a lower rates for U.S. companies than global players, Henry said it is too early to tell in which direction reform will go. Speaking of border adjustment proposals, Henry said the House Republican blueprint for tax reform does not provide clarity on whether a U.S. cedant would be considered to be exporting a risk to a foreign reinsurer or importing a service.

"If it is viewed as an import, we support efforts to carve out financial service payments including insurance and reinsurance payments from the border adjustment provisions," Henry said. These provisions would apply to businesses that are sourced in the U.S. AXIS Capital has a significant amount of business that is sourced from outside of the U.S., he added.

"Against the backdrop of a shifting landscape, we believe the flexibility built into our organizational structure with investments and platform such as Lloyds will allow us to react reasonably nimbly to legislative changes and to proactively optimize outcomes once we have more clarity," Henry said.

Responding to a question on how much global reinsurance demand is based on arbitraging the difference in tax rates between the U.S. and Bermuda, CEO Albert Benchimol said his company charges the same rates as U.S.-based reinsurers when doing business in the U.S. He said the market clearing price is not set by people with different kinds of tax rates but by "a discovery process."

"I think as we see the tax environment changing we are obviously going to see how different companies react and we will do whatever we need to do at that point in time to optimize our portfolio," Benchimol said.